Obamacare And Republican Tax Ranting
Most Americans don’t understand the tax aspects of the Affordable Care Act (Obamacare). And a good thing, too. At least from the Republican electioneering standpoint.
If people understood that almost all the tax increases in this Act are targeted, that they take the form of a bigger Medicare tax (of less than one percent) that only applies to people making more than $200,000 a year, and a cadillac tax on the kind of health plans favored by high income earners, “the biggest tax increase in history,” as Republicans like to label Obamacare in their new attack ads, would seem absurd.
The biggest confusion and the most flagrant Republican misstatements about Obamacare and taxes, of course, involves the law’s mandate that people who choose not to participate must pay a penalty, which the Supreme Court decided is actually a tax. And because it is “a tax,” and because real Americans hate all taxes, and because real Americans should also have the right not to be covered by health insurance if they so choose, this is deemed a great campaign issue for Mitt Romney and Republicans generally.
Has there ever been an argument so inherently stupid?
About 16 percent of Americans currently have no health insurance of any kind. Which means 84 percent do, and these 84 percent would not be subject to an opt-out tax because they are already in.
Sixteen percent of 300 million-plus Americans is still a lot of Americans, however. Most of the people who currently are not covered, though, are children not subject to this opt-out tax. It’s only their parents who might be.
So maybe 8 percent of Americans would still theoretically be subject to this tax if they choose not to take advantage of the generous subsidies Obamacare offers to poor and middle class folks who account for almost all such people. But really. Can we be sane here?
Can we take off those ideological glasses just for a moment, and put down the Tea Party wacky-tabacky ranting pipe? How many people really wouldn’t want to be covered by health insurance if there are generous aids that let them get it? How many parents with kids would actually make such a choice?
Is there anything really debatable here? In the real world? Please.
But wait, you say. What about all those small businesses that will be hit with crippling new tax obligations because they must have a health plan for their employees or pay a new mandated tax? I have actually computed the number that would be so affected. Zero! The reason? Companies with less than 50 employees need not participate, and the government defines “small business” as those with less than 50 employees.
I don’t want to be too cute here, however. So again let’s look at the real world instead. Most businesses with more than 50 employees already have health plans in place. Such health plans have long been the most popular non-salary benefit offered by Americans companies. These companies won’t have to pay a penalty if they opt-out. They are already in.
Will there still be some companies with more than 50 employees that will be hurt by this mandate? Of course. It’s a big country with literally millions of businesses. But again, let’s try to think like adults.
Obamacare seeks to add more than 30 million people to the national insurance roles and have a near full-coverage system like the one in every other advanced country of the world — and some piss-poor countries, too, like Rwanda, where 96 percent of the population is covered by health insurance. To get close to this full-coverage goal has to cost someone tax money. With Obamacare, almost all the extra costs come from the top 5 percent earners.
So…Is this a good way to go, or should be stumble back to where we were before the law was passed and hope the Republicans to come up with something better?
These questions will not be addressed in this year’s Republican Obamacare attack ads. Let’s hope voters consider them anyway come election day.
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Republicans have long since abandoned making coherent, fact based arguments. Their candidate run on platforms consisting of nothing but imaginary threats, mathmatically and historically refutable fiscal policies, and outright distortions of what is going on today. And oh yea, bending the Bill of Rights to ensure America remains a white christian nation. Which is a shame, because the democrats are really a bunch of spineless, clueless, pandering slobs and if the GOP was more like it was 25 years ago, they’d be actually getting this country in the right direction I think. As it is we’ll just limp along to recovery.
MS, Rep or Dem, you don’t design a plan this big without some smarts. No, the ..thing is not a tax. With all due DISRESPECT for Obama, Romney and the SCOTUS, it is a penalty, like not lining up or being offside. And, a weak weak one at that, penalties have to be big enough, like chopping your hand off if you steal and five yards if you sneak across the line. The people that can afford insurance today, will still skip it because it doesn’t hurt not to when you pay a pittance and rely on emergency rooms, no pre-existing condition clauses and Dem largesse.
Again, no cost controls, preparation for a shortage doctor’s appointments, tort reform, and the Medicare payments cutback this fall.
a lot to worry about without a phony “tax” debate.
A 21 year old non-smoking woman can get catastrophic health insurance for $29 a month, $348 a year – less than half the $750 penalty. Why wouldn’t she do it and use the leftover for the deduction on such insurance?
As far as cost controls, here’s one take on it.
http://voices.washingtonpost.com/ezra-klein/2010/07/cost_control_and_the_aca.html
I only know what I read and hear and right now what I know is only the big things that are pointed out, like preexisting condition, children 26 years old, etc.
I will wait to make my final decision once the regulatory agencies take the 2000+ page bill and write the regulations that enforce the bills intent. Then we will know all the small things that will make this bill a good one or a bad one.
And if congress does the right thing, they will fix the bad and make it better. I won’t hold my breath waiting for that to happen.
Ohio, those plans are very narrow and usually have a HIGH deductible and/or clauses that limit their use; still, better than nothing. Right now, I would advise her to stray on her parents plan if she can.
dd
We used to have catastrophic insurance and the deductible was $5,000 which is a lot less than full coverage for a policy most young people wouldn’t use anyway. A 21 year old could be on her parents insurance – if they had any. The point is, the $750 could be used to buy insurance rather than a penalty, which I would advise them to do.
You asked about my daughter earlier; she was turned down even for catastrophic coverage for a pre-existing condition. She is patiently waiting till 2014.
It will be great if Texas and the other states refuse to initiate an exchange, so those people will be able to get into a government initiated exchange.
My overall point is that there will be plenty of “gamblers” not insuring, and that will mess up (can’t say the other word anymore, how antiseptic) the actuarial assumptions ACA probably used. I am a big beleiver in insurance, and was in the industry. I can tell from personal experience that some people do not insure even if they have a wife and kids. (I hated those people.)
dd
Yes, you can’t outguess stupidity. Here are some more numbers.
http://www.motherjones.com/kevin-drum/2012/06/buying-insurance-vs-paying-fine-whats-tradeoff
Ohio, thanks for that link. He really didn’t explore the case of the higher earners that duck (no pun) buying insurance. These are the people that will eat up a lot bucks when they get sick and buy platinum plans.
Will there still be some companies with more than 50 employees that will be hurt by this mandate? Of course.
This seems like a reasonable criticism to me. Why be doing things to hurt employers?
DG, I’m not sure, but I think I remember that Pelosi got some exemptions for her district.
DG: why do things to hurt employers? Because they are doing things that hurt their employees, that’s why.